Daggerdale - Bedlam Games Shut Down?

August 24th, 2011, 15:11

Originally Posted by khaight
My understanding is that US bankruptcy law places employee compensation claims at the top of the creditor list during the bankruptcy proceedings. That means employees would be paid… eventually. But bankruptcy takes time. How many of us could easily handle a multi-month delay in receiving our paychecks? It'd still be quite a hardship and I can understand a manager wanting to spare employees from that if he thought it possible.

That said, one does not screw around with the IRS. They seem to think that all your money is theirs, and any they deign to let you keep is a gift for which you should be duly grateful — and they have guns to back up their attitude.

I don't know about the US or other countries, but I do know that in Denmark there is a fund (called the guarantee fund for workers) that'll step in and pay the workers' paychecks in the case where a business is going down or has declared banktruptcy).

Isn't there also a difference in thr US if you declare chapter 7 or 11? (of some law or bill).

As for the IRS, I'm pretty sure that in Denmark at least, we would have talked about it.
And maybe the boss would be charged and get a fine or a suspended sentence here, because it wasn't intentional what he did. And what he did was out of care for his employees or workers.

I guess that the 401k money is pension money for the workers? or some other government regulated stuff? And I'd guess it is illegal to use this money to pay wages with? in the US at least…

In Denmark, the situation is different. Here we have unions, they have trade agreements, they have a collective pensionfund where you pay 8% or 15% of your salary or wage to that fund. This fund then invests the money in say windmills…or other stuff…

As for Bedlam and the Daggerdale game, I'd think the same, Bedlam Studios went through their advance very quickly, I'd guess. If a game company do not have a strong CFO or no-sayer in the financial department, money will burn - and burn - and burn - through the devs. pockets rapidly. For the very simple reason that most devs. are creative people that maybe sometimes are not always very practical when it comes to money. E.g. they forget to set money aside for stamps, or books, or some other stuff while buying expensive desks etc. etc.

Maybe this was the case here? Bedlam got a lot of money in advance, saw the $$$$ and spent and spent and spent it all. Untill it was all gone. That why a financial plan (-eh- a budget?) is needed so that the money will stretch for a long time.

Originally Posted by aries100
Isn't there also a difference in the US if you declare chapter 7 or 11? (of some law or bill).

There may be. United States bankruptcy law has multiple chapters, some of which apply to individual bankruptcy and some to corporate bankruptcy. I think there are different variations for companies that are trying to reorganize and shed some of their debt while remaining in operation and companies that are just shutting down. In the former case what usually happens is creditors exchange some of their debt for an equity stake in the reorganized company, in the hopes that the company will achieve success in the future and they'll get more of their money back. In the shutdown case it's all about liquidating assets by selling them off and using the proceeds to pay off creditors in a legally-mandated priority order.

I guess that the 401k money is pension money for the workers? or some other government regulated stuff? And I'd guess it is illegal to use this money to pay wages with? in the US at least…

401ks are a type of defined-contribution retirement plan. (The number comes from the law which created them.) Basically, each employee has the option to contribute a self-selected percentage of his salary to his '401k plan'. These contributions are exempt from income tax. Many companies will 'match' the contributions up to some level. The contributions are typically invested in a user-chosen set of mutual funds -- the exact selection of funds varies from employer to employer, but there are generally a number of stock index funds, corporate and government bond funds, a money market fund, a couple of foreign funds and a handful of age-linked blended funds. (My employer's plan actually has an option allowing for investment in individual stocks, although I don't know how common that is.) Profits from the investments are reinvested and compound over time. Income tax is paid on withdrawals from the 401k when the employee reaches retirement age.

It isn't entirely clear to me which '401k funds' were misappropriated in this case, but the most likely candidate is the company matching funds. Those would be considered part of the employee's compensation, and misappropriating them would probably be like misappropriating salary.